MOODY'S REVIEWS CREDIT RATINGS OF CITICORP (SENIOR AT A2) AND OF SUBSIDIARIES FOR POSSIBLE UPGRADE
New York, 06-21-95 -- Moody's Investors Service placed the long-term ratings of Citicorp on review for possible upgrade. The long-term ratings of Citicorp's bank subsidiaries, including Citibank, N.A., were also placed on review for possible upgrade.
Moody's said that its review was prompted by the company's prospects for continued strong core profitability, a narrower strategic focus, and a continuing commitment to control expenses. Citicorp has enjoyed strong market positions in many areas, but it has been inconsistent in translating these into superior earnings. However, as asset quality concerns dissipate, the company's balanced business mix, good growth prospects, and markedly improved risk profile suggest that its recent strong performance should be sustainable.
Moody's said that the negative credit implications of the company's share repurchase program will be considered in the context of the company's overall credit profile and earnings prospects. The planned $3 billion share repurchase over 24 months is significant relative to Citicorp's existing tangible common equity. However, Citicorp has substantially improved its capital and reserve protection over the last several years, while implementing initiatives to reduce credit concentrations and more closely manage credit and market risks. Moody's noted that, while the buyback is likely to preclude further growth in the consolidated Tier 1 capital ratio, a substantial portion of the buyback will be neutralized by the conversion of preferred stock to common shares, and the issuance of shares under employee incentive programs.
Moody's said that the primary focus of the review will be management's ongoing commitment to balance sheet strength in the context of its evolving business strategies. The review will also focus on risks related to Citicorp's continuing investments in and strategic emphasis on consumer banking, particularly in emerging markets. The company's international operations, though quite profitable, are potentially subject to stress scenarios that could expose the company to significant credit costs in the event of regional economic turbulence. Further, the company's domestic retail franchise outside of Metro New York is being repositioned, the profitable card franchise has only begun to reverse recent market share losses, and Citicorp's overall consumer franchise will continue to be targeted by bank and non-bank competitors.
The following ratings were placed on review for possible upgrade:
Citicorp -- the A2 senior debt rating; the A3 subordinated debt rating; the "a2" cumulative preferred stock and "a3" non-cumulative preferred stock ratings; and the A2 counterparty rating.
Citicorp Banking Corporation -- the A3 subordinated debt rating.
Citicorp Finance plc -- the A1 senior debt rating.
Citicorp Overseas Finance Corp. -- the A2 senior debt rating; and the A3 subordinated debt rating.
Citicorp Person-to-Person Inc. -- the A3 subordinated debt rating.
Citibank, N.A. -- the A1 rating of the bank for long-term deposits and other senior obligations; and the A1 counterparty rating.
Citibank (New York State) -- the A1 rating of the bank for long-term deposits and other senior obligation; and the A1 counterparty rating.
Citibank (South Dakota) N.A. -- the A1 rating of the bank for long-term deposits and other senior obligations; and the A1 counterparty rating.
Citibank, N.A. (London Branch) -- the A1 rating of the branch for senior debt.
Citibank International plc -- the A1 rating of the bank for long-term deposits.
The following ratings were confirmed:
Citicorp -- the rating for commercial paper at Prime-1.
Citibank, N.A. -- the Prime-1 ratings of the bank for short-term deposits and other senior obligations.
Citibank (New York State) -- the Prime-1 ratings of the bank for short-term deposits and other senior obligations.
Citibank (South Dakota) N.A. -- the Prime-1 ratings of the bank for short-term deposits and other senior obligations.
Citibank International plc -- the rating of the bank for short-term deposits at Prime-1.
Citicorp, headquartered in New York, is the largest bank holding company in the United States, with assets of $269 billion.
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